What does an Impairment Rider do in a disability income policy?

Study for the AD Banker Life and Health Exam. Utilize flashcards and multiple choice questions, each with hints and explanations. Prepare effectively for your test!

An impairment rider in a disability income policy serves to exclude specific pre-existing conditions from coverage. This rider is important for insurers as it allows them to mitigate risk by not covering certain health issues that could lead to a higher likelihood of a claim. By including an impairment rider, the policy specifies which conditions will not be covered, thereby helping to limit the insurer's exposure while still providing coverage for disabilities caused by other unforeseen events or illnesses.

This is especially relevant for individuals who may have a history of certain health issues; they may still receive coverage for other unrelated disabilities while acknowledging that previously identified risks will not be part of the policy. This approach enables insurers to extend coverage to a broader range of applicants, albeit with certain exclusions that help manage their risk and financial exposure.

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